Hopes for housing rally

The premium housing market could be set for an upturn if the next 12 months reflect similar patterns to the 2008 market rally, property analyst RP Data says. The company noted there were parallels between 2008 and today’s market with the affordable end of the market being the first to improve, which then spread to the premium end.

“With current low interest rates coupled with recent value declines and subsequent improving housing affordability, there are signs of life returning to the market,’’ RP Data’s Cameron Kusher said.

But while transaction numbers are healthy and auction clearance rates have been steady, there has been only modest price growth across the capitals.

Mr Kusher said values were lower compared with the same time last year. Over the 12 months to September 2012, the most expensive suburbs recorded a price drop of 1.7 per cent.

He said that when the market emerged from the financial crisis in 2009, property values rose across each sector thanks to low mortgage rates and first-time buyer incentives. He said the capital city housing market bottomed in May and recorded a 2.1 per cent increase to October.

James Freudigmann, Propell National Buyers’ Advocates manager, said while there were fewer listings, buyers were active and vendors were selling successfully if they were keeping their price expectations in line with the market.

He said quality stock was hard to come by in Sydney and that some houses were selling seven to 10 per cent above market value because of buyer competition. He said that while the upper end was starting to stabilise, prices were yet to recover.

“The high end in Sydney has been punished, it’s been hit the worst," Mr Freudigmann said. “The upper end across Brisbane, Sydney and Melbourne has copped a flogging over the past 12 to 18 months."

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The Reserve Bank of Australia will announce on Tuesday if it is cutting interest rates after holding steady in November. The Housing Industry Association called for rates to be lowered this week in an effort to bolster the market.

The Real Estate Institute of Victoria expects about 950 homes to be auctioned in Melbourne this weekend. Another 970 are expected next weekend, 930 the weekend after and 120 on December 22. In Sydney, Australian Property Monitors expects 577 auctions this weekend.